Emap shares sink on revenue alert

Many consumers are turning away from magazines

Shares in UK media group Emap have sunk by 12% after the firm warned that underlying revenues may fall slightly following tougher trading conditions.

The company, which owns magazines FHM and Closer and radio stations Magic and Kiss, said that advertising demand had weakened after a strong start to 2006.

Emap, as with other media firms, has to deal with stiff competition and the increasing influence of the internet.

The company said it was going through a "period of change and volatility".

Shares in Emap tumbled 103 pence, or 12%, to 734p during morning trading in London.

'Softening market'

Lorna Tilbian, an analyst at Numis, said that the comments from Emap reflected "the challenges facing UK consumer-facing media with respect to soft current trading and technology-driven structural change".

Technology driven structural evolution and difficult trading conditions are creating a period of change and volatility Emap Check Emap's share price

Emap said that even though it has seen good growth in circulation from most weekly titles, "we are seeing an increase in the rate of decline in other titles, particularly men's and automotive".

It added that there was a "softening of the market".

The situation in the radio advertising market was very similar, though Emap said it expects "to continue to outperform the UK radio market due to our strong local brands and national reach".

"Technology driven structural evolution and difficult trading conditions are combining to create a period of change and volatility in many of our markets," Emap explained.

The firm said that underlying revenue for the first half of the financial year "may be marginally down", while for the year as a whole it was likely to be "broadly flat".

In June, Emap agreed the sale of its French magazine division to Italian publisher Arnoldo Mondadori Editore. The company is set to return £285m to its shareholders when the deal is completed.

"Just as investors had breathed a sigh of relief following the sale of the troubled French magazine division, it now looks as though the UK magazine unit is finding trading more challenging," said Keith Bowman, an analyst at Hargreaves Lansdown.

"Combine this with a weaker outlook for Emap's other major business, radio, and the shares look extremely vulnerable to full year profit downgrades," he said.